5th East Asian Congress
Comprehensive Economic Partnership: East Asia and Beyond?
Mahani Zainal Abidin
Institute of Strategic and International Studies, Malaysia
3 – 4 December 2007
Outline
• Introduction • Regional Integration and Community Building • Market-Driven Processes: Trade and Investment Links • State-Driven Processes • Cooperation based on Common Interests • Conclusion: The Way Forward
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Introduction
• Establishment of an East Asian regional grouping
– APT (East Asia) and APS (East Asia Plus) : two routes both with ASEAN as the vital and irreplaceable part of and EA regional grouping
• Kind of regional grouping envisaged
– EAVG: community-building and economic dimensions
• Use of word community – different connotations • APEC
– Economic partnership through open regionalism
Explore the effective and most likely comprehensive economic integration with East Asia as the core driver
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Regional Economic Integration and Community Building
• Regions integrate through market-led and state-led processes
• Market-led: Emergence of network of businesses
• State-led:
Standard economic European Community based model; Focus is an economic community – single market type concept
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Regional Economic Integration and Community-Building
• State-led
APT or APS – need to bear in mind the community envisaged by ASEAN
Economic partnership is a component of the broader regional integration Is ASEAN is a model for regional integration? if use ASEAN integration as the starting point, then ASEAN Plus needs to build on what ASEAN has achieved and concur with what ASEAN aspires to achieve;
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Regional Integration and CommunityBuilding: • ASEAN’s vision – ASEAN Community
Three Pillars: ASEAN Economic Community (AEC) ASEAN Socio-cultural Community (ASCC) ASEAN Security Community (ASC)
Scope of integration compared with the European Community Economic integration compared with the European Community
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Market-Driven Processes • Trade and Investment Linkages
FDI – due to the fragmentation of production process & the evolution of regional production networks Japan’s role Growing role of China Role of other sources countries Trade linkages: growth in intra-firm and intra-regional trade due to the exports and imports of MNCs in the region
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Intra-Regional Trade Share, 1995-2006 (%)
Region ASEAN (10) ASEAN+3 1995 21.1 37.0 2000 22.7 37.4 2001 22.2 37.3 2002 22.7 38.4 2003 24.4 39.5 2004 24.4 39.5 2005 24.9 39.1 2006 25.7 39.0
ASEAN+6
40.4
40.6
40.8
41.6
42.7
43.1
43.1
43.1
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Market-Driven Processes
• Trade Links
Rise of China:
- emergence of new trade triangles involving ASEAN, source countries and China; - New division of labor between ASEAN and China;
Relative intensity of trade among ASEAN with the Plus Three and Plus Six
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ASEAN-5’s Export Intensity Index and Import Intensity Index
Partners
Export Intensity Index
1990 1995 2000 2005
Import Intensity Index
1990 1995 2000 2005
Plus 3
2.04
1.45
1.56
1.46
2.75
2.52
1.76
1.46
Plus 6
1.88
1.39
1.55
1.48
2.52
2.31
1.63
1.34
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State-driven Processes
• APT cooperation began in Dec 1997, institutionalized in 1999 Implementation of measures of the EASG:
Establishment of the APT Study Group on Facilitation and
Promotion of Exchange of People and HR Development; Establishment of the East Asia Think-tanks (NEAT); Establishment of an East Asia Forum; Formation of East Asian Business Council
• East Asia Summit in 2005
Inclusion of India, Australia and New Zealand Second Summit in January 2007, Third Summit in November 2007
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In the mean time, proliferation of statedriven economic partnership processes
• FTAs involving ASEAN
ASEAN-wide arrangements – China, South Korea, Japan and India Japan – bilaterals with Singapore, Malaysia, Thailand and the Philippines; Thailand – Australia concluded, Thailand –NZ concluded; Singapore –Australia concluded, Singapore –NZ concluded; Malaysia - still negotiating with Australia and New Zealand, concluding with Pakistan
• China, Japan and Korea have concluded a number of FTAs with countries outside the East Asian region
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Economic Cooperation
• Common Interests
Financial Stability – triggered by the Asian
Financial Crisis - Chiang Mai Initiative – a regional financing arrangement - Economic Review and Policy Dialogue - Exchange data on bilateral capital flows on a voluntary basis - Asian Bond Markets Initiatives (ABMI) - APT Research Group
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Other common interests
• Non-traditional security;
–Transnational crimes such as human and drug trafficking, money laundering, terrorism, sea piracy, arms smuggling, international economic crime and cyber crime
• Energy security cooperation • Pandemic threats - Avian Flu and SARS • Environmental concerns - deforestation, forest fires, chemical pollution, air
pollution, marine and water contamination, global warming
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APEC economic partnership is on voluntary basis
Progress of APEC economic integration is slow Scope of economic liberalisation has not expanded significantly Focus of APEC has widen to beyond economic issues e.g. on climate change in the last APEC meeting in Australia Economic interests and links of APEC members are too diverse
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Conclusion
• Diversity of countries in East Asia Plus and Asia Pacific
• Current economic linkages are strongest within the APT • Deepening existing linkages need government-togovernment initiatives to overcome barriers to trade such as regulations, customs, exchange rates, product standards and other institutions – lower trade costs and increase trade and investment within APT first.
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Conclusion
• APT has established areas of cooperation that serve a common purpose and support economic partnership • Fundamental premise for the APT
Goal of community building is the promotion of the welfare and well-being of the people and the realization of the East Asian vision of cooperative “peace, prosperity and progress”.
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Conclusion
Potential problems of expanding beyond East Asia • Increase in size and complexities of integration
Membership issues? Increasing diversity with more members Experience of ASEAN efforts at economic integration shows the difficulty of accelerating the pace of integration – dealing with the issue of development gap among member countries
• APT has well established market and state led processes for further integration
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Thank you